The Hindu Business Line : DoT rejects Amar Singh’s spectrum pricing formula

New Delhi, Aug. 15 The Department of Telecom (DoT) has rejected the Samajwadi Party leader Mr Amar Singh’s formula for levying a charge on GSM-based mobile operators with excess spectrum over 6.2 Mhz.

DoT has instead suggested its own method of imposing the one-time charge at the rate of Rs 266 crore for each unit of spectrum beyond 6.2 Mhz, which is the maximum quantum of start-up spectrum specified in the licence agreement.

Basic assumption

Mr Singh had proposed a formula whereby existing GSM players would have had to pay Rs 1,312 crore for each unit of spectrum beyond 6.2 Mhz. The basic assumption for this proposal was that the mobile operator’s licence agreement does not specify allocation of more than 6.2 Mhz. Existing players including Bharti Airtel and Vodafone Essar have been given up to 12 Mhz spectrum in some circles.

Rejecting Mr Singh’s proposal, DoT said, “It is incorrect to say that according to licence condition, the Government would not allocate spectrum beyond 6.2 Mhz. As operators grew, the Government had to come out with guidelines and policies to make spectrum available to operators.”

“The only possible way the spectrum can be priced beyond 6.2 Mhz, which would be sustainable and acceptable to the industry, would be to price the spectrum at the unit price as Rs 1,650 crore (fee for pan-India mobile licence) divided by 6.2, along with prime lending rate to take care of time value of money,” DoT added.

The SP leader had also asked the Government to increase the annual spectrum fee by 2 per cent of the annual revenues for all operators who have more than 6.2 Mhz. However, DoT has taken a stand that this would put the operators under financial burden.

“The MP has suggested that no changes be made in spectrum charges up to 6.2 Mhz but increase it beyond by 2 per cent.

The DoT suggested an across-the-board increase of one per cent. Over 60 per cent of the current revenue is provided by spectrum range up to 6.2 Mhz. Therefore, if this range is not included in the revised spectrum usage charge, the overall contributions from the rate increase would appear lopsided and unfair,” the DoT note said.

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CDMA players want one time spectrum levy on GSM peers
GSM players oppose one-time spectrum fee
Issues in the spectrum debate
Mobile cos may be charged for excess 2G spectrum

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